Perspectives

Smart Cities Funding and Financing in Developing Economies, including South African insights

Assisting developing cities to finance their infrastructure gap through private sector participation approaches

Smart cities require infrastructure modernization—a high price-tag proposition that can be daunting for any city. 

The Deloitte Global series on funding and financing smart cities offers research and guiding principles for creative alternatives to traditional infrastructure financing models, based on the experiences of government officials, industry leaders, and our own professionals who have actively facilitated smart cities funding for clients.

Smart cities are a new concept with new technologies. Attracting investors requires a comprehensive strategic plan that clearly communicates the opportunity and presents a robust business model, a creative approach to funding and financing—new sources of revenue, new business models for recovery and value capture—and innovative financing structures for investors.

For private sector and institutional investors, developing economies present significant challenges, including political, regulatory, macroeconomic, business, and technical risks. International development organizations (IDOs)—multilateral development banks, development finance institutions, bilateral donors—can offer developing economies critical support and risk mitigation through low-interest loans, equity investments, credit guarantees, and technical assistance.

Key Takeouts:

  • Global trends that drive the need for greater infrastructure spending and unlocking private financing
  • Models that city governments can consider in delivering successful projects
  • Smart infrastructure solutions that use advanced technologies to deliver works and services to citizens
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